TRICKY BUSINESS 2

PROGRAMME 5: I-MAGINE

The entrepreneurs

Twenty-three-year-old graduates Andrew Selby and Alistair Farzad set up i-magine in response to personal need – they couldn't find iPod accessories online. Their first online store sold iPods and iPod accessories. Before long, they had set up other websites selling PlayStation Portable accessories and other items. They each earn around £30,000 a year, live ten minutes from work and have got used to a comfortable lifestyle that leaves them plenty of time to pursue their hobbies.

The business

Based in Guildford, i-magine is a successful online business specialising in digital lifestyle goods. It imports over 250 products from around the world, buying in bulk and selling at competitive prices. It has an annual turnover of around £200,000 and low overheads. Andrew and Alistair both work full-time on the business and do everything themselves. They rent office space for £200 a month from Alistair's father, and their warehouse is a garden shed.

The business problem

Andrew and Alistair must decide whether to maintain their current business focus or push to become market leaders and enter the VoIP (Voice over Internet Protocol) market. VoIP enables broadband users to make free calls over the internet. With over 10 million broadband users in the UK, the potential market for internet phones and accessories is enormous. Entering this market will require courage. Andrew and Alistair will have to leave their comfort zone, take risks, make big changes and work longer hours. The decision is time-sensitive and they must commit themselves soon.

The business solution

John urges Andrew and Alistair to stop cruising and start pushing their winning idea. He advises them to:

• invest in cost-effective premises with warehouse and office facilities – they may have to move away from Guildford
• employ a couple of staff to handle routine work – they will not be able to do everything themselves if sales of internet phones and accessories take off
• obtain funding for public relations, marketing and advertising – to attract customers and increase sales they must position i-magine at the leading edge of their niche market.

The outcomes

After a slow start, Andrew and Alistair start to think big and take action. They organise a £100,000 bank loan, hire staff and invest in VoIP products. They sort out the website and make local deals. They have noted John's advice but continue to market themselves and put the decision to move premises on hold.